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Sprint Opens Door To Selling Lightsquared Service

7/28/2011 10:18:32 AM Eastern
Overland Park, Kan. - Sprint formally opened the door to reselling Lightsquared's planned -- and controversial -- 4G LTE service instead of, or possibly in addition to, reselling Clearwire's 4G WiMAX service.

In an analysts' conference call, Sprint said it would outline its 4G plans in detail at an Oct. 7 investors' meeting, where it will also provide details of its plans to overhaul its own network of wireless base stations.

Sprint struck a 15-year agreement to add Lightsquared's L-band spectrum to its planned new nationwide network of base stations and to operate an L-band LTE network for Lightsquared, which in turn plans to resell 4G airtime on a wholesale basis to carriers and other companies wanting to offer the service under their own brand.

Under the agreement, Sprint gets $9 billion in cash over 11 years plus $4.5 billion in credits toward purchasing Lightsquared's LTE terrestrial and satellite airtime, which it could then resell under the Sprint brand.

Although Sprint hasn't announced whether it will resell Lightsquared 4G service, the company said the purchase credits give it "the option to obtain cost-competitive access to 4G capacity by offsetting Sprint's purchase of 4G capacity from Lightsquared should Sprint elect to incorporate the L-band LTE capability as part of its 4G offering." Sprint also has an option to purchase up to 50 percent of Lightsquared's capacity.

As part of the deal, Clearwire gets the opportunity to resell Sprint's 3G service to its customers, enabling them to offer a combined 3G/4G service.

The agreement, however, is contingent on Lightsquared getting Federal Communications Commission (FCC) approval of its plan to mitigate potential network interference with GPS devices.

Also as part of the agreement, Sprint gets a second lien on "certain" Lightsquared spectrum.

Sprint, however, currently resells 4G WiMAX service provided by Clearwire. Sprint is also Clearwire's largest shareholder, owning a little less than 50 percent of the company.

Sprint also has an agreement through 2012 to resell Clearwire service and an option to renew after that.

Besides hosting Lightsquared spectrum, Sprint could potentially host Clearwire spectrum to help that company expand its 4G footprint. On that issue, Sprint executives would only say that at their Oct. 7 meeting, they will comment about hosting spectrum from companies besides Lightsquared.

Lightsquared plans to launch 4G service in select markets in 2012 if it gets final approval from the FCC.

A variety of industry groups and government entities, however, are lobbying against Lightsquared's original plan and the company's newly promoted Plan B. The new plan would reduce Lightsquared-network output and initially limit operation only to a lower portion of L-band spectrum farther from GPS spectrum. The company would also develop plans in the interim to minimize interference in the remainder of the its spectrum.

One industry group, the U.S. Global Positioning System Industry Council, claimed that testing by a working group set up by the FCC showed that the revised plan would still interfere with all sorts of GPS devices, including consumer navigation products. Tests found that 20 of 29 consumer navigation products "experienced harmful interference" and that six of 39 GPS-equipped cellphones also suffered interference from Lightsquared's signals in the lower portion of the ban, the council contended in its own report.
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